Senate committee to move two-year extension of tax benefits

By Philip Brasher

© Copyright Agri-Pulse Communications, Inc.



WASHINGTON, July 16, 2015 - A Senate committee is set to move a two-year extension of popular tax benefits, including wind power and biofuel credits as well as a higher Section 179 expensing allowance widely used by farmers in purchasing new equipment. 

The tax provisions were renewed for 2014 just before the end of last year and have now expired. The House has acted to make some of the provisions permanent, including the Section 179 allowance, but those bills are not expected to become law because of the steep cost. 

The two-year extensions on which the Senate Finance Committee will vote on Tuesday will include the production tax credit that subsidizes wind power as well as the $1-a-gallon credit for biodiesel and the $1.01-per-gallon tax subsidy for cellulosic biofuels, products made from such feedstocks as corn cobs, wheat straw and wood chips. 

The committee's draft bill also includes extensions of the 30-percent investment tax credit for ethanol blender pumps and a special depreciation allowance for next-generation biofuel production facilities. 

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“This is the first time in 20 years where a new Congress has started with extenders legislation having already expired, and, given that these provisions are meant to be incentives, we need to advance a package as soon as possible,” said Senate Finance Chairman Orrin Hatch, R-Utah. 

His House counterpart, Ways and Means Chairman Paul Ryan, has not announced plans for considering a similar temporary extension. A spokesman said Ryan, R-Wis., continues to take the position that the tax provisions should be made permanent. 

The ranking Democrat on Finance, Ron Wyden of Oregon, said Congress needs to act on the tax extenders “now in order to provide greater certainty and predictability for middle class families and businesses alike."  However as we look beyond next week, it's critical we all recognize and take action to end this stop and go approach to tax policy through extenders.”  

In a letter to the Finance committee Friday, trade groups representing biofuel producers said that expiration of their tax breaks was “chilling investment for producers of advanced biofuels. These credits stimulate investment and growth of clean energy development and deployment and are vital to ongoing development of the advanced biofuels industry.”

The higher Section 179 allowance raises the amount a farmer or other business owner may immediately expense from $25,000 to $500,000 annually. The lapsed provisions also allows for a dollar-for-dollar phase-out of the maximum deductible amount for purchases in excess of $2 million, up from $200,000.

The higher allowance would cost the government an estimated $3.36 billion in lost revenue over 10 years

The bill that would make the higher allowance permanent (HR 636)  passed the House, 272-142, just shy of the two-thirds margin necessary to overcome a presidential veto. Democrats insisted that Republicans find a way to pay for making that and other tax breaks permanent

Other provisions in the Finance extension package that are important to agribusiness and food interests: an enhanced tax deduction for food companies that donate excess products, and a package of increased contribution limits and a carry-forward period for contributions of land donated for conservation purposes. 

The extension of the 2.3-cent per-kilowatt-hour tax credit for wind is among the most expensive provisions in the bill at $10.49 billion. Extension of the biodiesel credit would cost $2.56 billion. 

A summary of the bill is here. 


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